Enabling an F1 team to reduce purchased-parts inventory by over £10m
Improving planning, purchasing and stock visibility
A Formula 1 manufacturer was carrying rapidly increasing levels of purchased-parts inventory, tying up capital and increasing the risk of components becoming obsolete.
In Formula 1 this matters even more, as stock consumes budget within tightly controlled FIA spending limits.
We worked with the production, procurement and supply chain teams to understand what was driving the increase.
Production plans were changing too frequently, existing stock was not always considered before new material was purchased, and inventory held by subcontractors was not consistently visible in SAP.
Over 12 weeks, we helped the team stabilise the production schedule, tighten purchasing decisions and build a clearer view of where inventory was sitting and why.
The programme contributed to a reduction of more than £10m in purchased-parts inventory.
Key Issues
Frequent production changes
Production schedules were going through multiple iterations over short periods.
Parts could be ordered against one version of the plan, only for requirements to change shortly afterwards.
This created excess inventory and made it harder for procurement and suppliers to work to a stable demand signal.
Existing stock not used first
Usable stock was often hard to spot.
Interchangeable option parts could have met new requirements, and parts from previous builds could sometimes be reused in later builds.
Because these were not easy to identify, they were not always considered before new orders were placed.
That increased the risk of usable material becoming obsolete while replacement parts were purchased.
Limited visibility of inventory
Inventory reporting was infrequent and lacked detail, and stock held by subcontractors was not consistently recorded in SAP.
As a result, the team had little awareness of how quickly inventory was rising and had not been taking the measures needed to control it.
Approach
Stabilising the production schedule
Showing the team the impact of frequent schedule changes on inventory led to fewer short-term iterations.
With plans changing less often, procurement and suppliers had a steadier demand signal and less stock became obsolete.
Tighter purchasing controls
Checks were introduced before new orders were placed to account for existing stock, interchangeable option parts and future requirements.
This also highlighted parts from previous builds that could be reused in upcoming development runs.
Making subcontractor stock visible
Gaps in how externally held stock was recorded in SAP were identified and corrected.
With a clear view of what each subcontractor was holding, the team could work with them to use it before ordering more.
Improving inventory reporting
New reporting brought historic stock trends together with a breakdown of the biggest contributors, showing inventory by department, supplier and external location.
The team reviewed it regularly to spot where stock was accumulating and to focus first on the items with the greatest impact.
Results
Reduction in purchased-parts inventory
Purchased-parts inventory was reduced by over £10 million.
Supplier OTIF
More stable requirements and fewer unnecessary orders helped lift supplier On Time In Full (OTIF) performance from around 55% to over 90%.
Transformation
The reporting developed during the project continues to support the team's inventory, planning and purchasing decisions.
“We finally have visibility of inventory, and we can already see improvement in the numbers.”Chief Operating Officer